British foodmakers' confidence sags as weak pound erodes margins

Reuters Staff

3 Min Read

A customer carries a shopping basket at an Asda store in northwest London, Britain, in this file photograph dated August 18, 2015. REUTERS/Suzanne Plunkett/files

EDINBURGH (Reuters) - More than two-thirds of British food makers have become less confident about the business environment since Britain’s vote to leave the European Union, a survey published on Wednesday said.

Three-quarters of British food manufacturers have seen an increase in the price of imported ingredients due to the fall in the value of the pound since the vote, and 63 percent reported a decrease in profit margin, according to the poll by Britain’s Food and Drink Federation (FDF) between Sept. 16 and Oct. 7.

The survey followed a raft of data showing that British consumers have so far been largely unaffected by the June referendum, which heralded an end to more than 40 years of stable trade relations within the EU.

Among businesses, however, there are clear signs of doubt which may signal weaker economic growth down the line.

Earlier this week a British Chambers of Commerce survey showed business investment and turnover confidence hit four-year lows.

Of 82 companies of all sizes surveyed by the FDF, or around one third of its total membership, 81 percent said they expected the price of ingredients to continue to rise in the coming year, but only 32 percent of them expected UK sales to increase.

Food and drink, Britain’s largest manufacturing sector, provides 400,000 jobs directly, of which almost a third are filled by non-British EU nationals. Of those companies with EU staff, 71 percent said employees had expressed concerns about the referendum will mean for them and 8.7 percent reported that some staff had stated they would leave Britain.

Prime Minister Theresa May has given little away on her Brexit negotiating strategy, signalling that she wants to return sovereignty to Britain, reduce immigration but also have the best possible deal with the EU for businesses and trade.

“The assurances we heard from government last week must be underpinned by credible plans for restoring confidence and negotiating a workable future relationship with the EU,” Ian Wright, Director General of the Food and Drink Federation, said in a statement accompany the survey findings.